For a country of just 5.5 million inhabitants, Denmark has achieved a success in cinema in the last few decades far outweighing its modest size. Dwarfed by larger neighbour Sweden in the 1960s and 1970s, Denmark has been picking up scores of awards at international festivals recently, spearheaded by provocative enfant terrible Lars Von Trier, whose latest film Antichrist featured unsimulated sex and self-mutilation.

Yet while art-house audiences coo and cluck at Denmark’s cutting-edge offerings, they mask a deeper crisis taking place within Danish cinema at home. Recent figures released by the Danish Film Institute show that although cinema attendance figures are at their highest since 1982, fewer people are going to see Danish films. Indeed, of the 14 million tickets sold in 2009, only around 17 per cent were for local films – and the figures for 2010 aren’t likely to be much better.

Henrik Bo Nielsen, CEO of the Danish Film Institute, admits that 2009 was a “God-awful year” but is also quick to point out that 2008 was a huge success. Glancing out of his top-floor office windows in the Nørreport area of Copenhagen, he says that by European standards the figures aren’t bad. “But our aim is to play Champions League every year,” he adds, “and just playing European League like we’ve been doing last year and this year – we’re not happy about it.”

One of the main criticisms levelled at the Danish film industry – which produces around 25 features and 30 to 40 documentaries a year – has been the hoops filmmakers have had to jump through to achieve funding. Much of the controversy has centred on a 60/40 scheme, established four years ago, that uses a point system looking at track-record to judge whether a project is worthwhile, agreeing to state funding if predicted sales are expected to reach at least 175,000 tickets. Only one in six funded films from 2009 achieved this minimum benchmark.

Last Wednesday the Danish parliament voted in a new Film Accord, redefining state policy. As governments around Europe slash budgets to the arts, Denmark got away remarkably lightly with funding frozen at the same level as the previous four year period. And the dreaded 60/40 scheme – which Nielsen believes has led to cinema marked by a lack of risk and diversity, while taking audiences for granted – has been re-worked in favour of a more market-orientated approach.